Life at Work
Shifting Risk, Responsibility
Sunday, November 26, 2006
For many workers trying to decide which health plan to choose, this year's open enrollment season comes down to two options: higher costs or higher risk. Rising costs are old news, but the higher risk is new, compliments of a growing trend to push more employees into "consumer-driven plans," in which employees assume more responsibility for their health-care budget.
Either way, you pay -- whether taking on higher risk or taking more dollars out of each paycheck. And with health costs rising ever higher and more employers saying they can't take on the entire burden, the squeeze is on each of us.
The best many can hope for, it seems, is that the blow will be blunted.
Ajay Sathuluri, a senior Web and database engineer for TeraTech, a Rockville software firm, began feeling the pain last year. The company's health-care costs had gone up 25 percent, prompting Michael Smith, the president of the 15-person firm, to make some changes.
His solution: offer options that switch health-spending decisions on to the employee and find other ways to make the company a more attractive place to work.
Smith switched the firm from a CareFirst Blue Cross Blue Shield plan to a health savings account. The consumer-driven plan allows workers to set aside money before taxes to help with medical expenses. Total annual out-of-pocket health expenses, not counting premiums, can be as much as $5,250 for a single person or $10,500 for a family.
"This is their money," Smith said. "So if they want to go to the doctor three times a week, fine, go spend the money. If they want to do preventive stuff, go spend your money on that."
Sathuluri, who has been with the firm for seven years, said he and his wife were "very worried" about the change. They were planning to have a second child. And Sathuluri wondered whether he should consider moving to a larger company that offered better, more affordable benefits.
Instead, he started a flexible spending account -- a set-aside of pretax money to pay for medical expenses -- in which he has $3,000. He also bought insurance through CareFirst to help with his wife's appointments. That costs him an additional $125 each biweekly paycheck and has a deductible of $2,500 per year, paid through his flexible spending account.
According to estimates, the average pregnancy from test through delivery costs $6,500 to $10,500.
Smith, meanwhile, wanted to find some way to ease his employees' pain -- without incurring heavy costs. He provides free healthy drinks and flexible work schedules.
That was enough to persuade Sathuluri to forget about job hunting.